(Ref: 7/23/01 Memo)
The purpose of a Workers' Compensation Medicare Set-aside Arrangement (WCMSA) is to pay for all services related to the claimant's work related injury or disease, therefore, Medicare will not make any payments (as a primary, secondary or tertiary payer) for any services related to the work-related injury or disease until nothing remains in the WCMSA. These arrangements are established in order to pay for all medical expenses resulting from work-related injuries or diseases; they are not designated to simply pay portions of medical expenses for work-related injuries or diseases.
When WCMSAs are designated as lump sum commutations (i.e., the WCMSA is designated in a manner that the WC settlement is paid into the arrangement all at once), Medicare would not make any payments for the claimant's medical expenses (for work-related injuries or diseases) until all the funds (including interest) within the WCMSA have been completely exhausted. These same basic principles also apply to structured settlements.
Generally, WCMSAs that are lump sums (i.e., the WCMSA is funded by the WC settlement all at once) present less of a problem to monitor than structured arrangements. Medicare would not make any payments for claimants that possess lump sum arrangements until all of the funds within the arrangement have been depleted. For example, if a set-aside arrangement were established for $90,000, Medicare would not make any payments until the entire $90,000 (plus interest, if applicable) were exhausted on the claimant's medical care (for Medicare covered services only). http://www.cms.hhs.gov/WorkersCompAg....asp#TopOfPage